Texas Budget Surplus Proves as Contentious as a Previous Shortfall

AUSTIN, Tex. — The last time Texas lawmakers began a legislative session, a cost-cutting fervor filled the marble hallways of the Capitol in January 2011 as the state faced a budget shortfall of as much as $27 billion. Legislators warned of sparing nothing and no one from deep cutbacks — from highways, to prisons, to health care for the poor, to programs for preschool children.

Two years later, as lawmakers met Tuesday for the opening of the Legislature, the state’s financial picture was not nearly as dire. A boom in revenues from sales taxes as well as taxes from oil and natural gas production have given Texas a budget surplus that the state comptroller has estimated at $8.8 billion.

But the question of what to do with the surplus is proving just as contentious as debate over the shortfall two years ago, and will most likely frame much of the wrangling throughout the fast-paced 140-day regular session.

Republican and Democratic members of the State House and Senate have offered competing visions of how to use the surplus and how the state should respond to rapid population growth, severe drought, the federal health care overhaul and a host of other issues.

Education advocates and Democratic lawmakers have called for the Legislature to restore some or all of the $5.4 billion cuts made to public education in the 2011 session. But Republican leaders and other fiscal conservatives have expressed reluctance to finance anything beyond growth in student enrollment particularly when a lawsuit against the state over how it finances public education will not be resolved until later in the year.

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A representative marked the opening of Texas’ 83rd Legislature by placing his hat and a yellow rose on his desk.Credit
Ben Sklar for The New York Times

“I think there’s going to be a group of people who think we’ve got the money, we need to spend it,” said Representative Jim Pitts, Republican of Waxahachie and chairman of the House Appropriations Committee. “I think there’s going to be a group of people who think we need to cut our budget more. The session could be very difficult because of those two groups of people pushing us.”

Shortly after noon inside the Capitol’s Senate chamber, Gov. Rick Perry told senators that the comptroller’s revenue estimate released the day before was good news, but cautioned them to retain the state’s fiscally conservative model. Mr. Perry has called on lawmakers to support his so-called Texas Budget Compact, a Tea Party-style pledge to oppose new taxes and to replace the current spending limit for the state budget with an even stricter formula.

“There are interests all across the state who view Monday’s revenue estimates as the equivalent of ringing the dinner bell,” Mr. Perry said, adding, “However, in the face of that kind of pressure, we have to remember that Monday’s revenue estimate represents not a chance to spend freely, but an opportunity to rededicate ourselves to the very policies that have made Texas economically strong.”

Mr. Perry’s speech rankled some Democrats, who described the increased revenues as a “so-called surplus,” because services for public education, health care and other programs had been slashed statewide. “That’s why you raise revenue — to spend it wisely,” said Senator John Whitmire, a Houston Democrat. “There’s not a state agency in this state that is being adequately funded. Higher ed, public ed, social services, highways, parks — all of them are hurting. You shouldn’t start out by saying, ‘No.’ No is not a program.”

Mr. Perry’s remarks to the senators were interrupted briefly when a member of Mr. Whitmire’s staff who had been standing at the back of the chamber collapsed. Senators and others rushed to help her, but she appeared to be unharmed. When Mr. Perry stepped to the microphone again, he quipped, to applause and laughter, “I have not had that kind of impact on anyone in a long time.”

Mr. Perry has been busy building up his political capital, and perhaps his own ego, after his unsuccessful campaign for president. He has indicated that he is considering running for re-election in 2014 and has not ruled out making another run for the White House in 2016. His influence over the Legislature in light of his possible future campaigns remains an unknown factor as the session gets under way, but many believe his stumble on the national stage has not set him back in his home state.

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Gov. Rick Perry addressed the House of Representatives on Tuesday, the session’s first day.Credit
Ben Sklar for The New York Times

“He now looks a little more human maybe after his presidential run,” said Michael Quinn Sullivan, the president of Texans for Fiscal Responsibility. “But don’t confuse looking human with looking weak. The governor is still the governor.”

In Texas, lawmakers convene every other year and set state spending in a two-year budget cycle. While the 83rd Legislature was already being called one of the state’s most inexperienced — with nearly 50 first-time legislators in the House and Senate — it was also described by some as likely to be one of the most conservative. Republican leaders, including Mr. Perry, have expressed support for a so-called “fetal pain” bill that would ban abortions after 20 weeks of pregnancy. In addition, lawmakers have proposed requiring those applying for welfare and unemployment benefits to undergo drug testing and allowing teachers who are licensed to carry concealed handguns to wear their weapons in the classroom.

But aside from those proposals, the surplus has allowed the Legislature to focus on issues that have often been pushed aside in leaner budget times, including seeking new ways to finance long-delayed infrastructure projects, like the building of roads and reservoirs.

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Though they lost their supermajority in the House in the November elections, Republicans continue to control both chambers of the Legislature and to hold every statewide elected office. But the tone of the session will likely be set not only by numbers, but by the political dynamics at play.

The far-right agenda of grass-roots and Tea Party activists has come to dominate the Republican Party in Texas, turning moderate Republicans into an endangered species for the most part. Mainstream Republicans are likely to use the legislative session to bolster their conservative credentials, particularly after Ted Cruz, a Tea Party favorite, defeated one of the state’s most powerful Republicans, Lt. Gov. David Dewhurst, in a United States Senate race last year.

Mr. Dewhurst, who presides over the Senate as lieutenant governor and has indicated he plans to run for re-election, said that his campaign taught him a number of things — including doing a better job communicating his accomplishments to voters — but that his conservative record was impeccable. “To be up in Washington as a freshman senator in which nothing’s going to go on, you’re going to have gridlock so noisy you can’t hear,” he said. “I’m glad to be here.”

A version of this article appears in print on January 9, 2013, on Page A15 of the New York edition with the headline: Texas Budget Surplus Proves as Contentious As a Previous Shortfall. Order Reprints|Today's Paper|Subscribe